Service may help Google division generate revenue beyond advertising

SAN FRANCISCO -- YouTube plans to launch a music-video subscription service as the Google division looks to generate more revenue beyond advertising.

The new service, which may launch later this year or early next, will cost $10 a month, according to a person familiar with the plan. The person did not want to be identified because the offering has not been release publicly yet.

The service will come out first on mobile devices and it will let subscribers add music videos to their phones to watch and listen to even if they don't have a cellular or Wi-Fi connection, the person explained. YouTube already previewed this offline capability last month in a blog.

Google's move steps up competition with Spotify and Pandora Media, which have revolutionized music consumption through subscription services that run mostly through smartphones.

Right now, YouTube makes money by showing ads when people watch videos on the service. The company shares that revenue with content creators, including music artists and recording labels.

A $10 per month music video subscription would add a new revenue stream, although it's not clear whether or how YouTube might share some of that money with artists and labels.

The new service will not put restrictions on what is already available to view on YouTube for free. Instead, there will be a free version and a premium one. The premium service will offer the ability to view videos offline and also remove ads, the person explained.